In 2016, I started an LLC as a sole proprietor in my "side gig." I opened and funded an individual 401(k), making an employeR contribution for 2016. I also max my employeR contributions to a 401(k)

In 2017, I took on two investors and the LLC became a partnership on March 1st. I have made an employer contribution to the individual 401(k) based on a percentage of the two months of income as a sole proprietorship, but the income earned March to December is not eligible.

My CPA suggests a SEP IRA for the partnership, and the partnership can make employeR contributions, but I may be required to make contributions to each of the two other partners, as well. Additionally, one of the other partners receives compensation beyond a percentage of profits for work done for the benefit of the business.

Questions:

Does anyone have experience with a SEP IRA plan for a partnership?

Is the required SEP contribution any different depending on whether the income is reported as profit versus "guaranteed payment" on the K-1? I ask because one partner only receives a distribution as a percentage of profit and another receives both a distribution and guaranteed payment for work done.

How would filing as an S-Corp change things, if at all? I think the main difference would be that I personally could take both a salary and distribution, whereas now it's basically one and the same. The QBI calculation may also be affected.

You need professional help on this. I just want to point out solo 401k and SEP cover owner-employees, not passive investors. So you need to distinguish income as a passive investor and income for actually working for the partnership.